Sahara Credit Cooperative Society vs Union Of India

The proceedings in the matter have been conducted through video conferencing.

C.M.No.1624/2021 (exemption) in W.P.(C) 669/2021

Allowed, subject to all just exceptions.

The application is disposed of.

C.M.No.1626/2021 (exemption) in W.P.(C) 670/2021

Allowed, subject to all just exceptions.

The application is disposed of.

W.P.(C) 669/2021 & C.M.No. 1623/2021(stay)

W.P.(C) 670/2021 & C.M.No. 1625/2021(stay)

The above two writ petitions are being taken up together due to similitude of facts and common questions of law involved. With the consent of the

parties W.P.(C) 669/2021 is treated as lead matter and all references in the present order with regard to the pages of the paper book and the dates of

the order are in reference to the said petition.

Rule DB.

Learned senior counsel appearing for the petitioner during the course of his arguments has taken this Court to various orders passed by the Central

Registrar of Co-operative Society under the Multi State Cooperative Societies Act, 2002. Attention is specifically drawn to a Circular dated 3rd July,

2017 issued by Department of Agriculture, Cooperation and Farmers’ Welfare under the Ministry of Agriculture and Farmers’ Welfare

(Annexure P-4 to the writ petition) and has placed reliance on paras 2 and 3 thereof which read as under:

“2. Whereas, these multi-state cooperative societies are functioning as autonomous cooperative organizations accountable to their

members as per the provisions of the MSCS Act, 2002 and rules made thereunder, the business matters such as accepting of deposits, giving

loan to members and repayment of deposits fall under the powers and functions of the Board of Directors of the multi-state cooperative

societies and office of the Central Registrar has no role to pay on these matters.

As such, to make it clear to the members/investors/public, all multi-state cooperative societies (except multi-state cooperative banks) are

hereby directed to display the following in the entrance of the society, branches, in the forms relating to various deposits and also to post in

their websites, if any maintained:

“Multi-state cooperative societies are functioning as autonomous cooperative organizations accountable to their members and not under

the administrative control of the Central Registrar, Ministry of Agriculture and Farmers’ Welfare. Therefore, the depositors/members

are advised to take decision for investing deposits based on the performance of the society at their own risk. Central Registrar, Ministry of

Agriculture and Farmers’ Welfare does not provide any guarantee for these deposits.â€​

(emphasis supplied)

Learned senior counsel appearing for the petitioner contended that the orders dated 22.07.2020 at page 63, dated 24.09.2020 at pages 64-65 and

order dated 19.11.2020 at pages 66-67 are contrary to the provisions of the Multi State Cooperative Societies Act, 2002 as also contrary to Circular

dated 3rd July, 2017. It is also contended that the basic premise on which the order is passed is completely misplaced in as much as even if it is

accepted for the sake of arguments that some complaints have been received, it is only from a miniscule percentage of the members i.e. less than

0.06%, while the Society has thousands of members enrolled with it. It is also submitted that between July, 2019 to December, 2019 the petitioner has

already paid ₹17,487.82 crores thus there is no default, in payment by petitioner’s society.

Learned senior counsel submits that even otherwise, the complaints ought not to have been entertained by the respondents directly, as the petitioner

has introduced an Online complaint grievances settlement process and therefore the complaints can be sent on this portal and will be redressed. Senior

counsel for petitioner strenuously argues that all these points have been highlighted by the petitioner in the reply given by the petitioner to the Central

Registrar including the objection that he has no power, jurisdiction and authority to deal with the issues / complaints of the depositors / members as

Multi State Cooperative Societies function as autonomous cooperative organizations accountable to their members and are not under the administrative

control of the Central Registrar, Ministry of Agriculture and Farmers’ Welfare. It is thus prayed that considering the provisions of Multi State

Cooperative Societies Act, 2002 and the letter and spirit of the Circular dated 03.07.2017, the impugned orders dated 22.07.2020, 24.09.2020 and

19.11.2020 (which are at annexure P-1 (Colly.) to the memo of this writ petition) be quashed. Learned senior counsel further prays that during the

pendency of the present writ petitions operation of the said impugned orders be stayed.

Having heard the learned senior counsel for the petitioner and looking to the Circular dated 03.07.2017 and the provisions of the Multi State

Cooperative Societies Act, 2002 as well as the facts of the case, we are of the view that the petitioner has established a prima facie case in its favour

and the balance of convenience is also in favour of the petitioner. If the impugned order is not stayed, petitioner will be unable to carry out its business,

which would automatically result in loss and consequent winding up of the petitioner society. Thus there will be irreparable loss to the petitioner.

In view of the above, further proceedings before the Central Registrar - Respondent No. 2, as well as the operation, implementation and execution

of the impugned orders referred to above which are dated 22.07.2020, 24.07.2020 and 19.11.2020 at annexure P-1 (Colly.) are stayed till the next date

of hearing. Meanwhile petitioner in W.P.(C) 669/2021 and petitioner in W.P.(C) 670/2021 is permitted to carry on its business activities in accordance

with law and as per the bye-laws of the petitioner co-operative society.

Learned counsel appearing for the respondents seeks time to file counter affidavit. Time as prayed for is granted.

Let the counter affidavit be filed before the next date of hearing.

List on 19.02.2021.